Market commitee, V. ACIT Circle,

ITA 4626/DEL/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1023 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 11-11-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 26-11-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B K GUPTASR
• Keywords: Opportunity of being heard; Revenue expenditure; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : D NEW DELHI) BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.4626/DEL./2007 (ASSESSMENT YEAR : 2004-05) M/S MARKET COMMITTEE INDRI (KARNAL) VS. ACIT, CIRC LE KARNAL. KARNAL (PAN/GIR NO.AAALM0085D) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI B.K. GUPTA,SR.DR ORDER PER A.K. GARODIA, AM THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ,KARNAL DATED 2.7.2007 FOR ASS ESSMENT YEAR 2004-05. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) KARNAL WRONGLY CONFIRMED THE ADDITION OF EXPENDITURE ON REPAIR OF ROADS AS A PPLICATION OF FUND WHICH MUST BE TREATED AS REVENUE EXPENDITURE. 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) KARNAL WRONGLY CONFIRMED THE ADDITION OF ACCRUED INTEREST AS INCOME WHICH IS NOT REQUIRED IN CASH SYSTEM OF ACCOUNTING.. 2. THIS APPEAL WAS FILED LATE BY THE ASSESSEE . THE ASSESSEE HAS SUBMITTED AN APPLICATION FOR CONDONATION OF DELAY. THE REASON GIVEN FOR SUCH DELAY IS THAT THERE WAS NOT AN OFFICER IN CHARGE AND WORKMAN STAFF WAS THER E AND THE APPEAL COULD NOT BE FILED IN THE ABSENCE OF OFFICER IN CHARGE. THE SECOND REAS ON GIVEN IS THAT THE ADVOCATE WAS ALSO BUSY IN OFFICE BECAUSE OF LAST DATE OF FILING OF IN COME-TAX RETURNS AND UNDER THESE CIRCUMSTANCES, THE DELAY SHOULD BE CONDONED. LD.DR OF THE REVENUE DID NOT RAISE ANY SPECIFIC OBJECTION AGAINST CONDONING OF DELAY AND W E FEEL THAT IN THE FACTS AND I.T.A. NO.4626/DEL./2007 (A.Y. : 2004-05) 2 CIRCUMSTANCES OF THE PRESENT CASE, THE DELAY DESERV ES TO BE CONDONED AND HENCE WE CONDONE THE DELAY. LD.DR SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW. 3. THIS CASE WAS LAST FIXED FOR HEARING ON 11.11.20 09. ON THIS DATE, A FAX MASSAGE HAS BEEN RECEIVED FROM THE ASSESSEE IN WHICH IT HAS BEEN SUBMITTED THAT HE FIRST GROUND OF APPEAL IS NOT PRESSED AND ACCORDINGLY THIS GROUND I S REJECTED AS NOT PRESSED. 4. REGARDING SECOND GROUND OF APPEAL, THERE IS NO S UBMISSION OF THE ASSESSEE AND HENCE, WE DECIDE THIS GROUND OF APPEAL AS PER MATER IAL AVAILABLE ON RECORD. IN THE ASSESSMENT ORDER, IT HAS BEEN NOTED BY THE ASSESSIN G OFFICER ON PAGE 10 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS MADE INVEST MENT OF RS.85.50 LAKH IN THE SHAPE OF FDRS WITH HVPN @ 10.5%, BUT NO INTEREST INCOME HAS BEEN DECLARED IN THIS YEAR. IT HAS ALSO BEEN OBSERVED BY THE ASSESSING OFFICER THAT TH E ASSESSEE HAD BEEN RECEIVING INTEREST ON THIS DEPOSIT REGULARLY AND HAD RECEIVED INTERES T UP TO 30.9.1999, BUT NO INTEREST INCOME HAS BEEN DECLARED DURING THIS YEAR. THE ASS ESSING OFFICER WAS OF THE VIEW THAT INTEREST INCOME ON FDRS IS TO BE DECLARED ON ACCRUA L BASIS IN EVERY YEAR. ON THIS BASIS, HE MADE AN ADDITION OF RS.897750/- @ 10.5% ON THE D EPOSIT. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). BEFORE THE C OMMISSIONER OF INCOME-TAX (APPEALS), IT WAS THE CLAIM OF THE ASSESSEE THAT TH E ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING AND, THEREFORE, INTEREST INCOME WILL BE TAXABLE IN THE YEAR OF RECEIPT AND THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTI FIED. IT WAS HELD BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT FROM THE AUDIT REPORT AS WELL AS FROM FINAL ACCOUNT, IT IS CLEAR THAT THE ASSESSEE IS FOLLOWING MIXED SYSTEM O F ACCOUNTING AND NOT PURELY CASH SYSTEM OF ACCOUNTING AND, THEREFORE, INTEREST HAS B EEN RIGHTLY TAXED ON ACCRUAL BASIS. IN THIS REGARD, WE FIND THAT ALTHOUGH COMMISSIONER OF INCOME-TAX (APPEALS) SAYS THAT IT IS CLEAR THAT THE ASSESSEE IS FOLLOWING MIXED SYSTEM O F ACCOUNTING, BUT HE HAS NOT CITED EVEN A SINGLE INSTANCE AS PER WHICH THE ASSESSEE HAS CON SIDERED INCOME OR EXPENSES ON ACCRUAL BASIS AND NOT ON CASH BASIS. BEFORE US, THE AUDIT REPORT AND FINAL ACCOUNT ARE NOT FURNISHED. UNDER THESE FACTS, WE FEEL THAT THIS IS SUE SHOULD BE DECIDED AFRESH BY COMMISSIONER OF INCOME-TAX (APPEALS) AFTER RECORDI NG A CONCRETE BASIS OF HIS DECISION. I.T.A. NO.4626/DEL./2007 (A.Y. : 2004-05) 3 WE THEREFORE, SET ASIDE THE ORDER OF THE COMMISSION ER OF INCOME-TAX (APPEALS) REGARDING THIS ASPECT AND RESTORE THIS MATER BACK TO THE FILE OF THE COMMISSIONER OF INCOME-TAX (APPEALS) WITH THE DIRECTION THAT HE SHOULD DECIDE THIS ASPECT OF THE MATTER ON MERIT AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BO TH PARTIES AND HE SHOULD INDICATE IN HIS ORDER THE BASIS OF HIS DECISION ON THIS ISSUE. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN OPEN COURT AT THE CONCLUSION OF THE HEARING ON 11.11.2009. SD/- SD/- (C.L. SETHI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: NOV. 11, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A), KARNAL. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT